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Effect of Possible Cable a la Carte on HD Unknown

December 7, 2005

After stiff resistance for years from former FCC Chairman Michael Powell and the vast majority of cable operators, Powell's successor is sending chills through the cable industry by publicly saying that allowing individual consumers to pick and choose their own cable channels should not adversely affect currently acceptable subscriber fees.

The cable industry continues to strongly disagree with Chairman Kevin Martin, sticking by its story that by giving all subscribers virtually all available basic non-premium channels--that is to say, give everyone on the same tier the same service--can it hope to keep costs down to a competitive level.

What effect a la carte would have on HD and future multicast channels--as well as channels with unique fare but small audiences--is the great unknown. If subs only watch ESPN 2 a couple of hours a month, would they pay a monthly fee, no matter how small, to retain it? And what happens to channels that may experience cyclical viewing, such as The Weather Channel in winter months or during hurricanes, or the Food Channel during the holidays?

Joining the fray in the past few days is none other than Chuck Dolan of Cablevision Systems, who had a very public family feud within Cablevision earlier this year over its Voom HD service--which it has since passed off to DBS. Dolan, too, now concurs with Martin that allowing a la carte services would not lead to the ruination of cable firms, networks or the stand-alone channels that make up today's cable universe.

Dolan got a huge audience for his views on Dec. 5 when his "a la carte is like going to the supermarket" argument was featured, albeit briefly, on NBC Nightly News and on MSNBC.com. A la carte proponents include at least one influential Capitol Hill player, Sen. John McCain (R-Ariz.).

Along with cable interests, opponents of a la carte have also argued that newer channels still trying to earn loyal audiences wouldn't stand a chance if they had to rely on being specifically ordered by subs who may not know they would even enjoy the channel if they don't get a chance to sample it first. A la carte proponents, on the other hand, say such a scheme would more easily allow families to keep so-called indecent programming outside the home.

Exactly how an a la carte approach may affect local broadcast HD channels and national HD channels is another question that remains, for the moment, unanswered. But it would appear its impact would be minimal. Yet as cable rate hikes appear likely in the next year or so from Comcast (a 6-percent jump) and maybe others, this may not be the best of times for cable to argue about saving money for consumers. At the same time cable says it wants to keep costs down by not allowing a la carte, they're simultaneously announcing rate increases anyway, for other reasons.